across the internet to get their packages closer. there is also the idea that they should somehow be able to see some return, but only large companies would be able to afford that. so with their content it to you sooner than if you wanted to buy your content from very small companies? host: the next story line is what? what should we be watching for? guest: i think the ball is in congress. they have basically three paths to pursue this. the bill under the congressional review act, which is now waiting for consideration in congress. there is not allowing the fcc to spend any money. then there is the possibility of a stand-alone bill that might be more nuanced and saying these

rules are bad. it could be transparency is ok, but nothing else you want to require is allowed. host: lynn stanton, senior editor. thank you for talking with us today. we want to thank the ladies and tennessee. eighth graders and first prize winners and that student cm competition this year. -- student cam competition this year. over the next three days we will introduce you to our top prize winners. the grand prize winner will be this wednesday at 9:00 it did. tomorrow we will speak with their first-prize winner in the high school category. -- the grand prize winners will be this wednesday at 9:15. thank you for watching today. we will see you tomorrow. [captioning performed by national captioning institute] [captions copyright national

cable satellite corp. 2011] >> coming up, we will go live to george washington university's's school of international affairs for a daylong conference on foreign policy affairs. speakers include scholar state department officials, and others. we will join in at 10:30 eastern. later tonight, and look at same- sex marriage in america. we will hear from the democratic strategist behind a lawsuit challenging proposition 8.

and we will get an update on the proposition 8 status in california courts, and what it means for the rest of the country. again, we will go live to the daylong conference on policy debates at 10:30 this morning. to get us there, a discussion from this morning's "washington journal" on reducing the federal deficit. "booktv." >> "washington journal" continues. host: mark zandi is the chief economist from moodys.com. before we get too deep into the debt ceiling reduction discussion, we want to continue the discussion on gas prices. the lead story this morning in usa today -- "usa today," you

are quoted as saying that "higher gas prices are upsetting the sharp cut in payroll taxes for 2011, prompting economists to brighten their outlook this year." so, how much will rising gas prices hurt the economic recovery, in your opinion? caller: -- guest: is a big hit. if gas prices stay where they are for the remainder of the year, it will be the equivalent of a tax increase of $100 billion. which is roughly the amount of tax cut we are getting from the reduction in payroll tax this year. that was part of the deal that congress and the administration came to last year.

affectively, we are taking the payroll tax cut in literally putting it into our guest tank. it is fortunate that we got the tax cut when we did, but it means we will not get a boost to the economy that i was hoping for. the economy will not be performing nearly as well as i had hoped even a few months ago. and it is because of the gas prices. host: moving on to the debt reduction ceiling debate, congressman ryan has put out a debt reduction plan. so has the obama administration. compare the highlights between the two and give us your analysis on which is better. host: there is commonality -- guest: there is commonality between them. the consensus from both plans is that we should cut the deficit by roughly $4 trillion over the

next 10 to 12 years. there is commonality with respect to the fact that the earliest debt reduction should be on spending restraint. of course, the president's plan also includes some tax increases, particularly very high income households. the riot plan does not include that. the wry and planned also has more spending cuts, particularly with regard to medicare and medicaid. the president has some cuts, but not nearly as significant as the wry and plan emphasizes. makes a big change in the medicare program, essentially privatizing it. making big cuts as a result of that. i have a courage that intellectual consensus seems to be forming.

there is a big gap that needs to be bridged in a great deal of debate that needs to do that. i think that we are moving down the right path and we will wind up in a reasonably good place. it will take a push on the bond market to get there. host: last week you wrote "the sudden proliferation of long- term plans for the but federal budget means that national debate over fiscal challenges have begun in earnest. as the recent trip to the brink of shut down shows -- host: talk to us a little bit about your thoughts regarding what kind of compromises have to be made between these competing entities in order to get to the deficit reduction and debt reduction that you are talking about.

host: one key area that they need to work on is compromise -- guest: one key area that they need to work on is compromise. what will get us to that $4 trillion in deficit reduction over the next 12 years? right now the republican congress is arguing that there should be no tax increases. the administration argues that there should be some on higher income households. certainly an area that will require a significant amount of work and debate. the other area that will require significant compromise is regard to medicare. i think that if we are going to address our long-term fiscal problems, we are going to have to make some changes in the health-care system to reduce the growth of future health-care costs. it is appropriate that policymakers are focused on that in these budget debates, but

there is a big difference there and it will take some hard work to bridge that gulf. in my mind, those are the key areas where there are going to have to be significant amounts of debate, discussion, and ultimately compromise. host: we are talking with mark zandi, the chief economist with moodys.com. we will be talking with him over the next 40 minutes about the debt ceiling and debt reduction. if you would like to get involved in the debate, please give us a call. for republicans, 202-737-0001. for democrats, 202-737-0002. for independents, 202-628-0205. you can also send us messages through e-mail and twitter. arlington, texas, willie is our first caller on the democratic line. go ahead. caller: i am calling because gas prices going up is bad for a lot

of people. i have two cars and me and my wife use them both at the same time. i do not understand why they going up. yet again, money follow wars. guest company tipped the woods to the guest, gassing up. -- the gas company tipped the woods into the gasoline, gassing up. host: what do you think about the deficit reduction program coming from the republican house? caller: it is not producing anything. it reduces them spending a lot of money and take from us, the middle class as usual. america has always eaten off of us. host: your response to willie?

guest: let me respond quickly to both of his topics. energy prices have gone up for a few reasons. the most significant and immediate reason is the unrest in the middle east. there are a democracy movements into turmoil throughout the region. a region that produces a lot of oil and is the key to global energy markets. plus, the man continues to rise, particularly in emerging economies, like china, which is a case in point. also, the value of the dollar has declined a bit. putting pressure on commodity prices, like oil. a smaller reason, all of those things have come together to push up energy in gasoline prices. it is a confluence of things.

there is a good point to be made here. the burden of reducing future deficits is going to fall on all of us. deficit problems are very massive. to give you a sense of it, our budget deficit in the current fiscal year is going to come somewhere close to $1.30 trillion, up $1.40 trillion, close to 9% of the gdp. we need to get that deficit down considerably. it would be nice to be as 0%, but if we could get it down to 2% it would be a great goal. it will require a lot of restraint. including tax increases. you cannot generate enough revenue, you cannot cut spending and tough, without having the burden fall on all americans. so, everyone is going to pay a

price, unfortunately. fundamentally, that is why it is a difficult problem to solve. host: chad, republican line. caller: good morning. i am wondering why we cannot use interstate cop squads to affect the tax on alcohol, pornography, cigarettes. looking at those numbers, we are looking at half of a trillion dollars each year spent on this stuff. as far as i am concerned, you cannot fix these problems over nine. i know that from personal experience. guest: good point. good question. of course, so-called [unintelligible] taxes, as you mentioned, many states impose high sin taxes.

many states have been raising them to address current budget problems. at the end of the day, there is not enough revenue there. the budget problems are much larger than could be solved by taxing those products, even at very high rates. it is worth considering, but i do not think that we can rely on that to significantly solve our problem. we will have to make much deeper changes to the way the government spends money and the way that we tax ourselves. one other point that i would make, there has been some discussion of raising taxes on gasoline. obviously, that will not far fly in the context of gas prices at $4 for gallon, but i think that there is logic to raising gasoline taxes in the long run.

it can raise a significant amount of revenue. putting pressure on people to move away from, change their behavior from, using high energy cars. also, for us as a nation to become more can energy independent. there are a lot of benefits to the economy if we can do that. there seems to be a public sentiment that people do not like that idea, but it is similar sito a sin tax. host: this article comes from "the washington times." host: give me an example of some of the good effects and bad

effects that he is talking about. guest: well, taxes, by their nature, are distortionary. for example, take the payroll tax. literally a tax on work. people for working. their employer and themselves have to pay a tax based on their earnings. so, to raise the tax revenue, which is helpful in reducing the budget problem, it also reduces the willingness and incentive of people to work hard. of course, we want people to work as hard as possible. it is good for the economy and helps to address our budget problems. there is a good example of a tax

with benefits that we have to be careful with. we have to be careful whenever blue -- whenever we raise or lower taxes, looking at the effects that it has on people in terms of investing, working, all kinds of things. host: we are talking about deficit reduction with mark zandi. caller: good morning. i have a couple of questions. why can u.s. government paid down some of the deficit with assets we have? i would like to know how much gold, supposed to be like 147.3 million ounces in fort knox. if we could take our assets and pay them down, why not? i think the price of oil is gone

to keep the economy from growing just like it did several years back. the oil companies seem to be doing it for more reasons than just money. i think that is the way mr. obama behalf of manipulating his moves. there henchman up there that speculates for them, you know, causing companies to go back -- answer those for me if you can. guest: with respect to the nation's assets, they are quite sizable. the federal government owns a lot of real estate and office buildings. there is a fair amount of gold in fort knox. frankly, i'm not sure how much that is. i know we cannot sell enough assets to make a significant dent in our fiscal problems. more important, it does not address the ongoing gap between what we spend and tax revenues

that we generate. you could pay down some debt, but you still have a very large gap between our spending and our revenue and that does nothing to close the gap, so it does not solve our problem. we have to close that gap significantly. with respect to energy in gasoline prices, i am not sure i got the exact gist of the point you're trying to make, but it is laudable to look in that direction to see if we can generate more revenue perhaps raising some kind of windfall profit tax on energy companies. but that is not one to generate a lot of revenue. something that will not be sustainable long run. and it to prices, natural gas prices, will prices go up and down, all around. we need to make changes to our tax code so we can generate more

revenue on a consistent basis over the long haul. and focus our energy on the energy industry is not going to be helpful at the end of the day. to the previous point, if you raise taxes on energy companies, there are distortions. one is, reducing incentives of those companies to find different ways to explore, develop and provide energy. if we're going to get the energy prices down, we not only have to conserve more and constrain demand for energy, but increase the supply of energy. that would work against that end. host: next, and so, alabama, democrats. >> one thing your guest missed while ago did not say anything about, and to the bryan budget, the cuts --ryan budget, the

majority of the money he gains in the cuts goes to tax breaks for the wealthy. guest: that is one implication of the plan, that is that congressman ryan does not want to raise taxes or allow tax rates -- tax rates to revert back to where they were prior to the bush tax cuts for the wealthy. in fact, we're not going to generate the revenue. to make up for that lost revenue, congressman ryan has to find spending cuts somewhere else in his budget plan. most of those cuts are found in the cuts to the medicare program. one way, as you just said, he is trading off lost tax revenue because of a wish not to raise

taxes on upper-income house is by cutting medicare more significantly than otherwise would have to be the case. host: independent democrat in new york, sends an e-mail with two questions. the first one, to we have both revenue and spending problem at the federal state levels or just a spending problem as supply-seiters like rep ryan are wont to say? >> i think with a problem both with respect to spending and respect to tax revenue just to give you some numbers, context, total federal tax revenue for total federal revenue as proportionate to gdp is about 16.5%. since 1980, on average, it has been closer to 18%.

at times, measurably higher. in the late 1990's, best of times, well over 20%. revenues are very low relative to the size of the economy. spending is also a very, very high. federal spending as proportionate to gdp is closer to 25%. since 1980, the average has been somewhere around 21%, 22%. from that perspective, i think is fair to say we have both a spending problem and a revenue problem. one other thing, i do think it is appropriate when considering how to address our long-term fiscal problems, the focus more on the spending side than on the tax side. we need to do both. we need to constrain spending and raise more tax revenue, but i think if you look at other countries that have had similar

problems and had to deal with large deficits and debt loads in the past, those countries that addressed the problems largely through spending restraint than tax increases do better than those that focus more on tax increases. it goes back to the distortions we were talking about a few moments ago. also if you raise taxes, it can reduce your competitiveness as a nation. we're in a very global economy and have to remain competitive to maintain growth and generate a lot of jobs. i think we have a spending problem, revenue problem and we need to address this from both sides. but i do think it would be appropriate to focus more on spending than on taxes. by the way, i think of all the plans i've seen, the president's plan, congressman ryan's plan, that put forth by the fiscal commission to that. most of the deficit reduction in the long run is through spending

restraints and not through increased taxes. host: a second question running, have you, mr. zandi, in your professional capacity, run a regression analysis on the theory of the laffer curve? if yes, what praise the top marginal effective rate at which tax revenues collected are the maximum, and any tax increase or decrease from that rate would cause a revenue decline? guest: what the caller is referring to is the relationship between tax rates and tax revenue. the thinking is that when you raise tax rates very high, at some point you're not going to raise any more revenue but lose revenue because the higher tax rates cause people to pull back on their working and investments. and that loss of revenue from that is more than the increase

to to the higher tax rate. abouts a lot of debate this. there are a lot of studies that have been done. i think it is fair to say that the current tax rates, that raising those rates to a modest degree -- and all of the budget debates right now, everyone is talking about modest tax rate increases for income households -- i do not think we will get to the point where we will lose revenue. we may not get as much revenue as you may have hoped for because people might work less, try to move money overseas, try to avoid paying those taxes or higher tax rates, but i do think we will generate more revenue. the president, for example, talking about allowing the top marginal tax rate to go from 35% closer to 4% where it was prior

to the bush tax cuts. -- 40% where it was before the bush tax cuts. the broad concession -- consensus, would say this would generate a lot of tax revenue. i do not think we're in your near the point where tax rates are so high that raising them a bit more would lose the government money. host: we're talking with mark zandi about the deficit and the debt ceiling debate. our next call comes from connecticut's for republicans. caller: hello, thank you 4 c- span. i have a comment and question rid the comment, in our area,

there are a lot of wealthy people. a good many of us make our living working for them. i really hate to hear them villain eyes because they just living their life like anyone else, just a different level. my question is, i do not know a lot about economics but i have been told that mr. ben bernanke and mr. timothy geithner and the president and even hank paulson has had business connections before any of them were put into the positions they are and that between themselves, they are deliberately doing the dollar so we can pay off china, japan, brazil or whoever we owe money

to in worthless paper. i wonder if there's any possible grounds to something like that? i will hang up and listen. thank you. host: mark zandi? guest: no, i don't think so. chairman ben bernanke of the federal reserve was princeton professor. timothy geithner has been a lifelong government official and the federal reserve system and was head of the new york federal reserve and now head of the treasury. he was never, as far as i know, in the private sector. hank paulson was. that was the former treasury secretary under president bush. he was head of goldman sachs. he had extensive private sector background. quite varied in their

backgrounds, have very different perspectives on the economy, financial mall -- markets and policy. going to your point of intentionally debasing the dollar, the answer is no, i do not think that is their intent. i think is ben bernanke's view, appropriately, that the economy is still weak which is represented by 8.8% unemployment rate. we are making progress, starting to create jobs, but still early on in the process. the unemployment rate is very, very high. inflation is still low. even considering the surge in gasoline and food prices, consumer price inflation is still about 2.5%, quite low by historical standards. inflation expectations which are particularly important for the

monetary policy, what people think about future inflation, that also remains very low. from the perspective of the federal reserve, they have made a lot of -- i think is right they should keep interest rates very low. the interest-rate the federal reserve controls is effectively close to zero. because of that, that is putting downward pressure on the value of the dollar. global investors are scouring the globe trying to figure out where is the best place to put their money. meaning, where will it get the highest return? they look at the u.s. and say our interest rates are close to zero, a good place to put my money-and not a good place to put my money because i cannot make a lot of money. i will go somewhere interest rates are higher, say, brazil. or i would like to invest in china because china is booming and strong potential returns are there. that puts downward pressure on

the dollar. but when you step back and take a look at the back of the dollar broadly, it is down but still within the ranges that prevailed since world war ii. on the low side, low-interest rates, but pretty much in the same kind of general band that prevailed since world war ii. i do not think there is an intent to debase the currency, to devalue as a result of the very low interest rates that prevail and lower interest rates are here because of the very difficult economy. another quick point i will make, there are some countries that manage their currency. not determined in the marketplace. the most notable example is china. china determines its value of its currency, manages it.

i think most would agree the chinese currency is significantly undervalued, particularly against the dollar. it would stand to reason for the dollar to fall in value against chinese currency, and that is what is happening. that is where most of the value of the dollar is falling, with the chinese currency. the bottom line, in answer to your question is, no, i do not think there's anything nefarious going on. this is just normal policy. it is good policy. it is the kind of policy we need to help our economy. it is not a slam dunk positive, there are negatives to a. but it is the best approach. dealing with the debt ceiling, the christian science monitor this morning, one of their lead stories, next test

for deal making trio is the headline, talking about the workings between house speaker john boehner, senate majority leader harry reid and the president saying the debt ceiling talks may be a bigger hurdle than hard-fought deal on the 2011 budget. mark zandi, your thoughts about that? guest: it will be a hard-fought battle. at the end of the day, policymakers absolutely, positively need to come together and raise the debt ceiling limit. if they do not raise the limit, then, early july, the government will be put in a position of paying the bills as they come. when there is no more revenue, will stop paying the bills. that will affect everyone significantly. it may be the case, not only park service's that close, but it is going to be everything related to social security,

parts of medicare, medicare recipients may not get money to pay the doctor bills, could be everything that government does will be disrupted. it will be so significant that it would push the u.s. economy back into a very deep and dark recession. it could exacerbate our problems, make a much more difficult to reduce the deficit. in fact, will make a very untenable. the bottom line, absolutely no choice here for policymakers. they have to raise the debt ceiling limit. i do think it is likely and probably a good thing that policy-makers are going to try to use this as a way to make some progress in addressing our fiscal problems. one possible thing that is a good thing that could come out of this is ever and agrees to

some kind of debt trigger. this is an idea there is a mechanism that would be implemented say after the next election that would cut government spending, reduce tax expenditures to raise more money, if in fact the policy makers have not addressed our deficit problems and the debt load is not moving in the right direction. it is not determining exactly how we're going to address our fiscal problem, but it lays out the goals we're going to try to achieve. if we do not achieve those goals, then we have this mechanism in place. i think it policymakers can agree to something like that, the natural progress, that would be helpful and something good will come out of the state -- >> you can see this segment in

its entirety on our website, c- span.org. we are going after george washington university. they are hosting a conference on foreign policy debates in foreign countries with scholars, state department officials, and others. up next, remarks on the foreign policy debate in japan.

>> all right. we now move on to the japan session. i am pleased to be able to introduce the chair for the japan session, michael schiffer, joining us from the department of defense, deputy assistant secretary of defense for east asia. we have got a number of people from the government here, very busy people. the fact that they are joining us, i will assume that they think our project is important and did not want to miss it. his full bio is in the folder that you have got. mr. schiffer came to his present job from the stanley foundation, where he was running the policy, analysis, and dialogue. i remember the stanley foundation was the first to look

at this idea of rising powers and to try to write about that. it was very useful. it is particularly relevant that mr. schiffer could join us today. he has also been a fellow at the council on foreign relations. he has also worked in the u.s. senate with dianne feinstein. and he has also worked at the nyu center for war, peace for news and media. he has also a member of eclectic pursuits, including running a bed-and-breakfast. anyways, i am sure he brings a lot of experience to the table today. michael, i will turn it to you. just a word of caution to anyone up here. apparently, we're not supposed to shut this computer down in any circumstance. we will not be able to get the slides back up, so just a word

of caution. >> thank you -- >> one more thing. we are being taped by c-span. >> the incentive for me for that is -- that is never a good place to be. [laughter] there is always a lot of downside and little upside in these opportunities. in any case, thank you for asking me to join you this morning. this is the sort of conversation and discussion that we do not have the opportunity to engage in as often as we ought to in the policy community. as david and i were talking about before, you do not want to

make a habit of it, but every now and then, making policy decisions based on some information and analysis. [laughter] being able to spend a few minutes with you this morning to build some much-needed intellectual capital is extraordinarily valuable. so my thanks for doing this than for inviting me to come along for the ride. we will try to make up for the time that our colleagues on the china panel have stolen from us. [laughter] that is a feeling, not those of us who work on japan, are increasingly used to. [laughter] in any way, i will offer a brief introduction. one of the things that has impressed itself upon me in the past two years at the department of defense -- not sure that i would say the primacy -- but the

real weight of domestic political debates, and how they can drive foreign policy decisions. that is true in the u.s. and also in korea, japan, other asian countries as well. in many significant ways, i would offer there is perhaps no better example of the role that domestic political factors and political debates can have in shaping foreign policy and national security making common than in japan. and that is not just a function i should _ under the dpj, looking at how many meters of concrete get poured into okinawa. it is a bigger question of a different set of issues having to do with japanese culture, politics, the influence of

individual decision makers and the fact that the electoral politics are now having -- an influence on japanese policy making, as japan starts to feel a way to enjoy a two-party system. the discussion that we have lined up this morning should be very interesting and worthwhile and i would argue, from my personal perspective, the main incentive for drawing me here was the opportunity to avail myself of the wisdom and insight of three people that i always seek and value. as chair, my main purpose will be sitting at the end of the table and taking notes furiously and copiously as they offer their thoughts. so with that, let me turn things

over to dick and mitchie. >> banks earn much. it is great to be here. i want to thank henry, deepa, gw, for organizing this project, which has been of the enormous interest and has engaged us in ways that we are delighted to report out to you. can you hear in the back now? it may seem odd. it may seem odd to some folks that we are talking about -- including japan on a project talking about rising powers. this is not the 1920's. last time i checked. and it is not in 1980's. when we were all about about

japan as a rising power. it is true because japan is potentially a great power, many of the pieces to become a great power again, and of course, after the catastrophes of 3/11, the possibility that japan may be reborn again, at least reinvented yet again. so it deserves some closer analysis. that said, in a bid very japanese fashion, i start with an apology. this paper was written, for the most part, before 3/11. as we do the revisions, we will have to incorporate that. i hope that some of our comments will get to what 3/11 may need for a reborn, revitalized japan, or not. so what we have done here is right about what we call

hedging. well this chart is not in the paper, it is from a paper i did a few years ago. there is no exam, you will not be quizzed on this, but there is a point to the chart. debates about japanese national strategies, national security, are not new, not unique to the 21st century, not unique to the 20th-century, but have been around for a long time. in fact, importantly, connect over time. i am not going to spend a lot of time on it, just to safe, in the past, there were three real moments of consensus on what japanese strategy should be. that had led to this march

towards industrialization. that was very successful. the second being, after a time of real debate and discourse, between the girls and militarists here, another moment of great consensus. the greater east asia prosperity sphere, which led to the destruction of much of asia and, really, all of japan, which broke out into another debate that was rectified, in a sense, through the dominant brand strategy of japan and is still more less in place. the idea of cheaper underwriting american securities, and basically a mercantile real test strategy. hence, the ribbons while at the

bottom, heading towards what is still a question mark. the way that we map this discourse -- and this is what david was referring to in his remarks in the first session. there are two taxis in which the debate proceeds. one is the horizontal access, which is a proxy, in a way, for international relations. if you get too close to your alliance partner, here run the danger of becoming entangled in their wars. if you are too distant from your alliance partner, you run the risk of being irrelevant and being ignored and therefore, unprotected. so this question of how close you hold, how much distance you put between the u.s., has been a central element in japan security discourse for a very long time. the second vertical dimension has to do with the extent to which japan -- the statute of

for japan's bad behavior. could japan use force to settle international disputes? could they revise their constitution and allow this? i have been arguing that japan has been slowly but deliberately salami slicing at the pacifists. i am metaphorically challenge, so i will be mixing them a bit. it does not sound elegant, but it is what has been going on. this creates a four spaces for the debate. the pacifists in the southwestern quadrant -- each one of these has a different view of what japan should be and where japan should be, it where its identity should be. one of the views is japan should be seeking peace, one is prosperity. that is closely the yoshida

doctrine. one is that they should be seeking an alliance with its partner in the east. those would simply say, it is time to simply do it ourselves, sovereignty. this is what we would call the neo-autonomous. this is represented in institutional circles. what is interesting, about this array of views, we think, there has been a lot of movement. if you believe the yoshida doctineaires, and elsewhere in the middle east, these mercantilist s, if they were dominating the discourse with passive agreement, with the pacifists, to keep the

revisionists at arm's length, to not just of the u.s., but article 9 of the constitution, a gateway to the consolidation of power within their own party to revisionists, most represented recently by prime minister quiz to me. -- koizumi. it is time to be normal, and to be normal for some, in a very tony blair-like way. this is only one way to be normal. there is a way to be normal in indian-style, russian-style, and the canadians and germans thought about normality differently than from the u.s. the point is, september 2009, in

the late summer, when the d p j took power, it was an unprecedented supermajority in the national diet. it was the beginning of a shift that michael schiffer and alluded to. domestic politics mattered. the world had not changed much but the posture of japanese national security thinking and the discourse had changed. thanks to this serious behavior of the north koreans -- you can always count on them -- but also to what david was talking about, the surprising assertiveness of the chinese in the spring of last year and fall of last year. the government gave way to another government, which was more amenable to the status quo.

not completely, but more willing to of the united states. efforts that had been made to reduce host nation support were abandoned and so forth. it is in the paper. i hope you will have a look at it. what we thought would be particularly important was to change this array slightly. it seemed to us useful to re- dimension the debate on china. somehow, finding the right distance, not just from the u.s., but the right distance from china, was something that was the most important strategic choice facing japan today. getting it right, not just for the u.s., but getting it right with china as well, would require both military and economic readjustments. so we have re-dimensioned the

debate a bit. given the relative power taking place in the u.s. and power -- china, maintaining the distance from the u.s., while closing it with china, seemed to make strategic sense for japan. these policies and efforts, as we have seen, have not been for chicken and well coordinated. most u.s. and japanese policy- makers, alliance managers, continue to elevate the importance of the bilateral alliance at exactly the moment china had become more assertive diplomatically, and that alliance drift was halted. then again after the 3/11 crisis, it looks like the relationship was further enforced. the jury is still out on what 3/11 will ultimately mean.

still, this, too, agreed four spaces in a national security perspective. these contradictions of policies are reflected here in a revised model. somewhat familiar to us. for example, when you look at the southwest, as in the original model, there are those who trust -- distrust for entanglements. they are not just on the right. there on the left as well. there would prefer japan with the independent military capability. on the far left, no military capability at all. they see no reason to hedge their bets on china or the relative decline of the u.s.. from their view, japan should regain full sovereignty and provide for itself in a self- help world.

we talk about internal balancing. this group includes pacifists, an indication that the preference for autonomy in japan is independent of their preference for the use of force. that is why we readjusted the model. second, there are those in the north left who advocate a china- japan condominium of a kind. they prefer a strategy of what we call bandwagon. they discount china as a military threat and emphasize the benefits from a robust bilateral economic relationship. the main risks they face, of course, is the trail, by china. but a discount that. they imagine china will be generally a responsible stickle other than they do not want to miss the china bus. the third group are the

balancers. these are folks in the southeast. they are much more attentive to military threats from beijing, much less a manner -- enamored by the economic efforts with china. if those who bandwagon hedge with integrating china economically, those who would balance china, would hedge by balancing -- woodhenge militarily maintaining the robust relationship with the united states, in the belief that they will be more assertive. should those assertions be met with both contain and deter through an expanded network, but they would call alert states. australia, india, in collaboration. finally, this group which we call integrators in the upper right hand, the northeast. these are folks who believe japan can and should have it both ways.

in their view, better economic relations with beijing need not be purchased at the price of diminished relations with the united states, so they would pursue a dual head which would protect japan from economic privation by integrating with the chinese economically which would protect them from chinese coercion by maintaining a healthy alliance with the u.s. there are confident china's rise can be peaceful, but they do fear china's the trail and that u.s. decline -- a fear john's patrol and u.s. decline in equal measure. we have argued these ideas matter. but at the end of the day, we take time, at the end of the paper, to explain how struck we have been by ideas about japan's brand strategy there and how domestic politics has influence the choices in asia. things change and policies respond.

thank you very much. >> thank you very much. i always pause when he speaks because i am still digesting when he finishes. i am delighted to be here. thank you for inviting me to the conversation. it is a tremendously important topic. ike about this from the alternative direction, from inside japan looking out. but i do want to emphasize to the boat of the things that have already been stated so clearly -- two of the things that have already been stated so clear that, that is, japan has changed at which -- the way in which policies are looked at internally. that will have natalee implications for the region, but for our relationship with

japan. i feel like i have internalized so much of what they a say that it is hard to oppose any of it. let me tell you about the work that we have been engaged in for some time. that is, we have often, especially sitting here in washington, assumed that japan does not have for strategic thinking. that there is a context of ideas in relationship to us. this kind of work is integral to understanding that japan has made choices, strategic choices , and to gather in its relationship with us. madehere on out musthey have strategic choices as well.

but i think that what dick is getting at is very, very important, because strategic rocket as for japan now is going to be very difficult and will require changes institutionally. i could not help but note two words i got used and that was, redlines and silences. japan has had significant silence anderson in redlines when debating these issues. we have watched and policy

makers debate these issues and it is very much because some of these red light and some of the silences have diminished. what you are getting is of a good, healthy debate and an array of options. it is the still, underneath it all, buried deep concerns about these redlines and sign it -- silences. for example, debating a nuclear option. or autonomy in the treaty hobb discussion. but there is potential for japan to fundamentally alter its relationship with us. to fundamentally challenge the way in which they have cooperated with us. i think you certainly see that in the basic issue. i think you see it in the conversation that is a little bit quiet, but you heard it in the first year of the recent

government. but it also offers new opportunities. it goes back to comments in the china section, which was remember the days that starts in tokyo and looks out. even though we are doing these issues relative to the u.s., but as you are sitting in tokyo, where that gays is definitely looking out and it is looking gaze ismath -- were that gay looking alassane, and particularly looking westward. -- is looking at out. and particulates, looking westward. and we are looking at possible -- policies there no longer a successful corporate in japan today. that could be an interpretation

of our alliance or the kinds of cooperation that they have pursued with its allies, us. i have a basic set of questions occurred in my mind when i read the paper. my own brain at -- came at this in a slightly the driveway. -- different way. when you talk about -- particularly in the last third of the paper, which i think is so valuable. when you're talking about u.s.- china, i could not help but say, if you are sitting in tokyo and having this conversation with either politicians or intellectuals or other soft -- or others, the allies were set with back when. they were set in a world war ii. this was at the emergence of a nuclear era and a new strategic context in which a deterrent

required different set of capabilities than the japanese were prepared to develop. i'm not sure there has been a lot of rethinking about that kind of strategic alliance. not about the u.s. or china, but what can japan do or should japan do to acquire a to have an autonomous capacity to defend itself. at the end of world war ii, if this was -- this was a whole new world and japan was not prepared to go that way. that was the hub. that was the beginning of the strategic bargain with the u.s. i think ever since then, many left -- and the paper lays this out nicely. many have resisted, got an uncomfortable -- gotten uncomfortable, but it is a

strategic choice. the second is on the long-range for japan. i still kind of bridle of the idea that yoshida himself may have been a mercantilist. i understand why you do that, but this may have something to say about a post 311 japan as well. that time was for real in terms of japanese political contestation. there were never -- very different debate options about -- debate choices about what options japan have. this is what the paper does so nicely here. it was a reconstruction era. it was a particular historical moment. and here we are again at a moment of japan trying to rethink and potentially be at that reconstructive moment again.

historical context matters to me when i think of your schools of thought and they strengthen or weaken over time. part of the project is when you are looking at new strategic choices, how you determine what is continuity and was changed? -- how do you determine what is continuity and what is changed? define this for the individual decision makers? the second piece of this question is the the p.j. -- dp j. has a new school of thought a reason? have the cold in gaugers arrived, to japan to fundamentally alter japan's

choices? i do not think we have an answer yet. i think we watched a little of the campaign, but i think it is still too early. the dpj has not been in power long enough, but it is the specter of the power or rising to power that has this conversation happening about these new voices. i suspect if we look at 10 years from now, it will look a lot like the ldp. meaning, ruling in an of itself will start to shape their choices. my third point, how do you allow for new concessions? this is for the japan paper specifically, in the 1970's you have the portended end of the cold war.

you have the japanese articulating with a natural strategic preference. they're looking at energy, security, food. taking issue on the u.s. middle east boston -- policies, for example. you see japan moving in a much more autonomous set of choices than they had in the past. new conception? new school of thought? or just new latitude to make different strategic choices? the same thing could be going on in the northeast asian community concept. this is an area that is more receptive to japan, being in this more inclusive building. koizumi began in. you have a middle ground in the japanese sinking. it really does not fall down ideological lines, but it is an

attendant to the transformation in northeast asia that is ongoing. the ambitions of japan have to be central to the process, but it has been limited in the past. what all of us who watch japan are trying to grapple with is the idea of a loaf of bread being baked. the question in my my mind's -- in my mind, are we seen schools of thought that are challenging what was there before? in my mind, the autonomous have always been there. they have just not been a prophetic agenda. -- pragmatic agenda. where is it going to come from?

i have not heard anything yet, and hopefully will disagree with me, that suggests we move out of the four traditional schools of thought in japan. i think we are still in that middle ground, but the agents have shifted. i will not answer your question about 311 and its aftermath, but so much of our scholarship on japan has attempted to interpret the domestic policy preferences here. postwar ideology, where you stand on article 9, where you stand on reconciliation with china, where you stand on the relationship with the u.s. has to do with japan's thinking about the first half of the 20th century. one of the pieces that is so challenging for me, and i am doing this project that baker is going to help me with, i hope -- that dick is going to help me

with, i hope, how do you learn those lessons that need to be learned and who learned those lessons? and how you affect those schools of thought and need to become elated? -- need to be affected. that transition of japan did not turn out well. i have had people tell me that they ought to go back and try again on that trajectory. that set of choices has now been taken away. if your parameters have shifted. negotiating in the united states and the postwar time, there is not as a surly learning going on. how you see it in -- there is not necessarily learning going on. you see it in the bases issue. dpjink you'll find that the

workarning on what will and what will not work will set up the parameters for the party as well. thank you. >> thank you. i think we have about 20 minutes for questions and discussion. let me let you respond. >> i will try to answer questions as much as possible. then i will refer it to dick. let me thank the organizers for including japan as one of those rising powers. and i would like to thank the government and the u.s. forces in japan for providing important support in the time of

our need. and i would like to have people here to come visit japan. this is a difficult time for us, but it would be nice if we could see a lot of friends coming to visit us. tokyo is safe. i just came from tokyo. please keep visiting japan. and if you are a nuclear specialist, this is an interesting time, going on. i think we have been doing several things to think more deeply about things -- and to think about more deeply how we shape our security.

i started talking to the american partners to discuss the nature and credibility of a nuclear deterrent. for this, our nuclear officials came to washington in late 2008, and some are coming from the japanese embassy here. they talk to their american counterparts about what we would like to see in the nuclear defense policy. there were basically two messages. the first one, our people told the american friends, they made a statement that usable penetrating nuclear weapons might enhance the credibility of the nuclear deterrent. they did not say they would like to see it happen.

second, we asked the u.s. government to consult with us in advance in case they decide to decommission nuclear-tipped tomahawk missiles, and they did later on. third, we asked the u.s. government to provide more information to us on nuclear war plants and in nuclear posture that the u.s. maintains. it is amazing bet how long we have been talking about -- it is amazing how long we have been talking about nuclear deterrence without relief seriously discussing what is in the content of that. but we have started doing so.

we have been backtracking since then. that happened under the liberal democratic party rule, ldp. when the new administration came into office, they started to talk more about half a world free of nuclear weapons. -- a world free of nuclear weapons. we are excited to see it come back again. a second, with north korea we are trying to talk about deterrent by punishment. but what we talk about north korea, the turn by punishment does not really work. when they use their nuclear

weapons against us, it will not be based on rational calculations. that would be discouraged -- disparate kinds of kings. it would be a suicidal attack. in that case, a deterrent by punishment would not work very well. what we do is try to boast to deterrence by denial capabilities, and in doing so, we have tried to reduce the ballistic missile defense systems and what we call civil protection, which is actually true defense. -- through defense. third, when we talk about china, certainly, we talk to the american partners to talk about comprehensive deterrent capabilities, but in addition to that, last year the government

of japan published basic guidelines in which we started to talk about dynamic defense. people get troubled -- puzzled by that. we came to focus more on peacetime with china. we are not talking about fighting wars with china. we are engaged in this confidence course, a game of tug-of-war with taiwan -- not tie 1.

-- and not ti taiwan. [laughter] hopefully. [laughter] we talk about the level forces and vessels in that area in order to check the chinese naval activities and check the chinese maritime activities. things like that. how do the ideas get translated into a strategy? in the case of when prime yoshida tried to form this relationship with the u.s.,

it was 1940's and 1950's -- it was the 1950's. but the concept was dr. nice -- was made doctrine in the 1960's with some professors and university. recall recently japanese scholars tried to decide what the prime minister then and the professor said. the prime minister himself did not talk about strategy.

he made the strategic choice in the 1950's because it was the only viable and promising option. -- actually,60's yoshida said japan would have to become more normal. he did not use those words, but demand in the future. -- but he meant in the future. she talked about the continuity between ldp and dpj, and i

agree. when the captain of the fishing boat decided to ram his boat into another boat last year, the japanese government decided to back off. but what prime minister koizumi did in 2004, he returned those chinese that landed on the island. they just returned them right away. he was criticized for being soft on china then. the distinction that we have to make between ldp back then and dpj, they have a very different policy toward the united states. thanks. >> thank you. my apologies about that.

i guess we have about five to seven minutes for questions and discussion. as i was talking about with henry earlier, one of the good things about working for the department of defense fresnel, nobody expects me to be polite, so i will be quite broken by wrapping it up of things. i will take three questions and ask people to get very quickly to the questions and then turn them over to our panelists for their thoughts and response. let's start over here. >> my question is to the professor. if you bring up the stance of dpj 1 or dpj 2, what is the

location of both parties? and is there a bipartisan cooperation between the jiabao? -- between the two? >> next question in the back of the room. >> how prepared is japan for increased cooperation with its regional neighbors, particularly with south korea? >> and a final question and the back. >> we just heard an inadvertent taiwan.ce to ti1

[laughter] there was a recent statement by the japanese government that conspicuously did not mention the country. it turns out that taiwan has provided more assistance with their disaster than any other country, but there was no thank you. >> if we can take the questions in order. dick, if you want to address the dpj 1 and 2 question. >> it is a good question and i'm going to a knowledge now that the dpj is all over the map. it is a mutt. it has a lot of progenitors. there are some leaders that have had cabinet positions. there are those that were advisers to the first dpj prime

minister. they were the van wagner's with china. you remember that mr. -- they were the bandwagoners with china. your member that mr. ozawa brought a whole group with him from china. there are folks in that quadrants as well. i think the current administration has migrated toward the northeast. you have dual hedgers in place. that makes them not completely distinct from the ldp as we last saw it in power. as for the prospect of cooperation -- oh, that is a different question.

>> i will say that the prime minister did not mean to be in the northwestern region, but was stumbling into it by picking up on this. under makan, dpj moved to this integrated area. on the second question, i would say that cooperation with south korea is very important. we have a u.s. alliance and we --e trying to try lateral eye

tri-no space lateralize -- tri- lateralize. we are in partnership with several countries, south korea, east asian countries, and india. why? these are the countries that we tend to share values. and also, in the document we talked about changing american positions? i forget. there was talk about changing american position in the world. which means, relative decline. we did not say the decline of

the u.s., but changing. you can look at the original document. japan is not rising, but declining. and -- japan is not rising and not declining. but it is declining in relation to china. we have to mobilize new partners. we have to find new partners to make the balance right. those are the countries that we think will be, and hope will be , emerging partners. >> this one is very important and it struck me in the original report that became the national

defense program guidelines that there was a centerpiece that did not get much attention, which is the expectation -- this is not my reading, but the way the media dealt with it. there was this expectation that it was in full decline. and because of this, -- it was a euphemism. they said change, but we read it as a decline. and there was the expectation that the u.s. would demand more of its allies. you have to be able to deal with that. and that there would be less provision of public goods in the region. the japanese had an open conversation about something that i think the media and the rest of us missed on precisely this question. that gets to sheila's question

.hat she asked us are there new senses of how to think there is a new sense on this subject and it is starting to bubble up in this way? >> there is a pertinent comment that i wanted to make on the paper, which is, it ends with a very interesting question. that is, what happens when the schools of thought align? i immediately thought about the obama administration and the dpj. forgive me. it is japan now. i do not know the answer to specifics, but we have watched new party come into power in tokyo and we have watched it have to formulate policy on north korea, which it did in the campaign and election of 2009.

they have, in fact, developed a position on inductees, etc. there was purdum with clarity -- pretty much clarity on that issue. and secondly, there was the end of a relationship with south korea. again, the dpj came in with a diplomatic approach to both china and south korea. i think they have been very high successful in reorienting on south korea. the relationship is very close. the relationship with taiwan is not so close. they have had a difficult year. but in 2010, learning how to make pragmatic choices in a moment, you have had two instances that will change

throughout the year. these types of questions will matter significantly this next year. south korea will have an election, we will have an election and japan may very well have an election next year. a lot of is that you're talking about will come to a head, potentially, to give you more empirical data -- non [laughter] >> let me thank my panelists for a very rich discussion. i wish we had more time for q&a and conversation, but i'm trying to give some time back to the organizers.

i will also say that, personally, the time pressure will spare me any danger of inadvertently committing policy, which is always a good thing. [laughter] but thank you again for a very good paper and discussion. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> let me urge you to take your seat. please help yourself during the course of this presentation. the we have coffee and cold drinks outside. you are welcome to help yourself. may i have your attention, please? i asked you to take your seats. i may need some help from the department of defense. [laughter] while we are quieting down, let

me mention to you now the papers have been mentioned over and over again. i want to make you aware of the fact that two of the papers have already been published preliminarily in the washington quarterly, the china paper in january and the india paper this month. they're both on a table out front. you can begin to get some idea of the richness of these papers. the other papers are being assembled for unedited publication that will come out in the first half of next year. i'm sure that any of the authors of those papers would be happy to respond to you if you send them an e-mail if you have any interest in reading the paper in for their debts. let me turn out to the catalana on india. -- to the panel on india. i am pleased to turn the program

over to robert blake. he is currently our assistant secretary for south and central asian affairs for the department of state. he has been an ambassador to sri lanka and the maldives as well as new delhi. he is a graduate of harvard college and has a degree that i also have an m.a. from, johns hopkins school of international studies. dan markey, a minute -- a friend of many years in the academic world. he is now with the council on foreign relations here in washington and is engaged in many aspects of policy and analysis in southeast asia. -- south asia. without further ado, ambassador blake. >> thank you very much, dr. lao.

is a pleasure for me to be here today to chair today's panel on domestic foreign policy debates. -- in india. i want to commend dr. lao for organizing this. i think it is a terrific opportunity to have a very important discussion. it is always a treat for me to get out of the bureaucratic trenches of the state department and come and listen to some of the real experts on a lot of these issues. it is a particular street to be with some quite distinguished academics here. i will introduce them in a moment, as well as my old cannot -- co-conspirator, dan markey, who was in policy planning for several years and we worked together closely. as someone who has been working on india off and on since about 2003 when i was the duffey -- deputy chief of mission in india

in 2003, i was pleased to read this paper and to see the treatment of all lot of my old friends on taxonomy and policy schools. i look forward to hearing more about that. i want to offer a few opening points of my own. first, taxonomy of offers a very different ways to look at foreign policy, but it also offers a constantly shifting dynamic in dealing with other countries that itself reflects the issues of the key decision makers, as well as the specific issues that have their own dynamics as well. it is a lot more complicated than these taxonomies show.

secondly, as the paper points out, i think shifting domestic policies has a very significant impact in india, as they do in the u.s. i would point to an example of the civil nuclear deal where we never imagined that politics would lead the dpj to stand so stubbornly against a nuclear deal, when really, they were the first who initiated it and championed its when they were in power. and of course, they shifted to opposition. it raises the question of whether that was pure politics, or did that, in fact, represent a new tilt toward hyper nationalism, as the authors talk about in their paper.

another thing we should probably consider is the role of regional parties and how they fit in to this scale. it often has significant impacts, specifically on specific countries for policies. i will give the example of the dmk, who off and on have had a very serious impact on india's policy with respect to sri lanka. and as far as coalitions, these regional parties also have a significant role to play in foreign policy. i would point to labor side -- lali versad and the role that he played in these regional issues. what determines the form policy of some of these regional policy

-- parties? and how can the u.s. best deal with them? it is something that we often grapple with at the state department. another important thought is that as states become increasingly global in their outreach, how does the impact -- how does that impact delhi's foreign-policy? i would also be interested in how this accounts for the indian diaspora. this is an -- a group that we have made an effort to support. again, we have to the about the

tamils and the impact that they have an indian foreign policy. you all have their biles -- thereby as, so i will briefly say that rich--- rajesh is at the school of disarmament and was previously a fellow at the research foundation. depa is the associate director for asian studies and research and she holds a ph.d. in political science from columbia university. and dan markey is a senior fellow at the council on foreign relations where he specializes in security and governance

issues in southeast asia. he served on the secretary's policy planning staff in 2003 and 2007. please join me in giving a warm welcome to all of them. thank you. [applause] >> just let me know that i flipped a coin this morning and rajesh gets to present the paper. >> lucky me. [laughter] >> we will both take questions. >> thank you. let me begin by thanking the organizers of this conference for inviting me to this conference. we have gone through three or .our rendition sions before i begin, a few thoughts

about the cabinet. i think some of this has come up in the discussion already. one is the link between the external, the public policy debates, and the policy-making is somewhat more tenuous. we think that even though there -- that link is somewhat tenuous in terms of a direct link, but it is somewhat reflective of the government also. you have the same set of government opinions. when you have five or six different perspectives, it is also a reflection of the government. the second reason why i think it is important is in the

procession they talked about the line. some opinions or some policies that have so much negativity are so much with in public opinion, they change their productivity. but because of the public position, there were not able to do it. -- they were not able to do it. in a sense, because of that, again, the public debate about -- it does become important. in the last session we talked

about silences. those sorts of issues become important when we look at public opinion. it is not that it is a direct influence in terms of promoting specific options, but in limiting government auctions. in a sense -- government optio ns. i think the public debate is important. having said that, i think the way that we divide up the groups within the schools of thought within foreign policy debate, we have not put it on a scale. at what we have done is use these little circles, partly because we see some overlap between these different perspectives.

it is not that they are completely distinct from each other. many thoughts are common to the various schools. the specific point that we are trying to make is that there are overlaps in these perspectives that are important. we have a broad sense of policy from 1944 onward through the that we have used. 1998 is a good dividing line to use because the nuclear was a specific element taking over then. until that point, what we see is a very strong consensus and you have on both sides the leftist

sort of opposition within a different perspective, and you also have a very minuscule right-wing military -- militant perspective. which you have a broad sense of foreign policy, even with public debate. there's a lot of argument and it is hardly reflective of the fact that there has not been a huge debate. but what we have had -- and it is partly reflective of the fact that there has not into gervais. but what we have had since 1998 is these characters and the

nationalists have divided into new nationalist and hyper nationalists, and also into liberal global list. the leftists have always been there to some extent and to some extent the hyper nationalists have always been there. but they have become more prominences 1998. -- prominent since 1998. they were dominant in 2004, especially during the nuclear debate. in a sense, that gave them some power. by and large, many times they are lined with -- they are

aligned with broadly [unintelligible] they tend not to have distinct opinion some time -- sometimes and they have what can sometimes be characterized as contradicting policies. the new nationalist are what we characterize as officially -- it used to be that the party in isttrol had a somewhat left i opinion.

and the speaker that you have. a couple of days is partly -- probably a good example of that. the hyper nationalists are essentially somewhat paranoid militarists. there are new ones, in the sense of they are much more accommodationist and they include sections of bjp and others. the liberals will was -- the

liberal colobus [unintelligible] they're primarily focused on economic growth. how does this translate into major policies and perspectives? we have divided it into eight where there are controversies and eight were there is some controversy. there is some support for arms control. there has also been the nuclear nonproliferation regime. that has changed to some extent. there is some cancellation even

on npt on whether they should join as an npt member. in a sense, you find some controversy there. some debate over arms control issues. a cigna began the amount of debate about getting close to the united states as well as suspicion over the united states. it was sort of a litmus test over where it can be autonomous or whether is going over to the

united states. the iaea meetings are usually very close the watched for that reason. -- very closely watched for that reason. what you have our boats the -- both the global list as well as the nationalists. the leftists and the harbor nationalists are much more focused on because of the involvement. there are differences, i think, in terms of the way we have looked at it.

the similarities are essential in terms of what we can do. especially in the first 1998 phase. there is no support for any military action to deal with pakistan. but there is broad support for enhancing military capabilities, but not any support in terms of use of force. in terms of strategic allies, there is some consolation of closer ties with the u.s. and so on. on. but it is